Are tax prep fees deductible?
You can lower your taxable income and reduce the overall cost of filing your taxes if you’re eligible to deduct tax prep fees on your federal return. This deduction can be especially valuable for business owners, freelancers, and landlords who rely on accountants to stay compliant with tax laws.
1) Are tax prep fees deductible?
We’ve got great news for business owners, freelancers, and landlords. Tax prep fees related to your business or rental income are deductible!
If you’re eligible to offset tax prep fees on your federal return, you’ll enjoy a substantial financial advantage. Your taxable income will be lower, along with the overall cost of filing your taxes. And if you’re a business owner pressed for time, a tax-savvy accountant can also help maximize your deductions and save you many hours of work.
If you’re a salaried employee, these fees can’t be added to the list of deductions on your federal return. It’s worth checking, however, if your state allows deductions for personal tax prep costs.
It’s possible that tax prep fee deductions for individuals could return in the 2026 tax year. Watch this space for news: we'll keep you posted if and when that happens!
2) Who can deduct tax prep fees from federal taxes?
You can deduct tax preparation fees from your federal tax return if you:
Own a business, including corporations and partnerships
Are an individual running your own business (sole proprietor)
Are a self-employed individual (freelancer or independent contractor)
Earn rental income as a landlord
Engage in farming as a business
If you fall into one of these categories, congratulations! Please bear in mind, though, that you can only offset fees directly related to these forms of income against your tax liabilities.
There are other, quite specific circumstances in which you may be able to deduct your tax prep fees. For instance, if you derive income from royalties, drive for a food delivery service, or work as a full-time sales professional who’s paid solely on commission, you might just be in luck.
Remember, if your sole source of income is from a salaried wage (also known as W-2 income), you cannot deduct your tax prep fees on your federal return.
If you're unsure whether you’re eligible to deduct your tax prep fees, get in touch with the SnapBooks team for friendly, knowledgeable advice you can count on.
3) Are accountant and CPA fees tax-deductible?
If you’re a business owner, your fees for tax planning, bookkeeping, and accounting services directly related to business operations are fully deductible. This includes the cost of preparing business tax returns, financial consulting, and payroll services.
Plus, hiring a tax professional guarantees you’ll take full advantage of all other eligible deductions and credits, further reducing your overall tax burden. Other potential deductible financial expenses include legal fees for business-related matters, business loan interest, bank fees, and financial software subscriptions.
Maximizing your deductions will help you maximize your professional success. Talk about a win-win situation!
Welcome to SnapBooks! We’re a virtual accountant firm specializing in outsourced bookkeeping services, payroll for small businesses, and small business tax prep. Whether you’re a small business owner or running a growing company, we’ll help you stay on top of your finances with expert support and accurate, real-time numbers.
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